In 1981, Abbott began investigating a new anticonvulsant drug, Depakote, that is formulated as a specially coated tablet. In this form, the drug does not dissolve in the stomach and does not cause the undesirable side-effects common with Depakene. In order to develop this improved anticonvulsant, Abbott replaced valproic acid -- the ingredient in Depakene -- with divalproex sodium. When this chemical enters the digestive system it is converted into valproic acid. See Depakote New Drug Application, reproduced in Administrative Record at 314 [hereinafter A.R.]. Thus, Depakote achieves the same pharmaceutical effect as Depakene.

Later in 1981, Abbott submitted a new drug application for Depakote ("Depakote NDA"). Because the pharmaceutically active chemical in Depakote is identical to that in Depakene, Abbott requested that the FDA refer to the Depakene application for the required clinical studies of safety and efficacy. Letter from A. G. Ramsay, Abbott Laboratories, to Bureau of Drugs (Dec. 29, 1981) (transmitting Depakote NDA), reproduced in A.R. at 310; Depakote New Drug Application, reproduced in A.R. at 321-324. The primary clinical studies conducted by Abbott were simply to demonstrate that recommended dosages of Depakote did yield biologically equivalent amounts of Depakene's active ingredient, valproic acid. Abbott successfully demonstrated the therapeutic equivalence of Depakote and Depakene, and the Depakote NDA was approved on March 10, 1983. See Letter from Robert J. Temple, M.D., National Center for Drugs and Biologics, to E. B. Chappell, Abbott Laboratories (March 10, 1983), reproduced in A.R. at 294.

One and one-half years after Depakote received FDA approval, Congress enacted the Hatch-Waxman Amendments. Among the purposes of the Amendments was the enhancement of competition in the drug industry through abbreviated procedures for the approval of generic copies of approved drugs. See Mead Johnson Pharmaceutical Group v. Bowen, 267 U.S. App. D.C. 382, 838 F.2d 1332, 1333 (D.C. Cir. 1988); see also H.R. REP. No. 98-857, 98th Cong., 2d Sess., pt. 1, at 14-15, reprinted in 1984 U.S. CODE CONG. & ADMIN. NEWS 2647, 2647-48 [hereinafter H.R. REP. No. 98-857]. These procedures substantially shorten the time and expense incurred by drug manufacturers to obtain FDA approval of generic drugs. To protect the research and development investments of the pioneer drug industry, however, the Amendments also entitle various categories of drugs that are approved through the NDA process, 21 U.S.C. § 355(b), to exclusive marketing periods regardless of patent protection. This privilege "protects products whose development has taken much time and money in FDA testing and review, but which have little [or] no patent life left when they are finally allowed on the market." 130 CONG. REC. S10504 (Aug. 10, 1984) (statement of Sen. Hatch) [hereinafter Hatch Statement]. During the exclusive marketing period, no abbreviated new drug application ("ANDA") may be approved for a generic copy of the NDA-approved drug. 21 U.S.C. § 355(j)(4)(D); see Hatch Statement, 130 CONG. REC. S10504; 130 CONG. REC. H9113-14 (Sept. 6, 1984) (statement of Rep. Waxman) [hereinafter Waxman Statement].

After Abbott objected to this designation, Letter from Michael Nelson, Abbott Laboratories, to Thomas J. McGinnis (July 10, 1986), reproduced in A.R. at 22-26, FDA affirmed its decision and suggested that Abbott might pursue its dissatisfaction by filing a citizen petition with the Commissioner of the FDA. Letter from Thomas J. McGinnis to Michael Nelson (Aug. 12, 1986), reproduced in A.R. at 27-28. Abbott heeded this advice and submitted such a petition, pursuant to 21 C.F.R. § 10.30, on August 29, 1986. In the petition, Abbott requested "a ruling that [its] drug product, DEPAKOTE (divalproex sodium), can be marketed exclusively by the Company for ten years from . . . March 10, 1983."
*fn2"
Citizen Petition, Docket Number 86P-0367/CP (Aug. 29, 1986), reproduced in A.R. at 1 et seq. [hereinafter Citizen Petition]. The basis for Abbott's contention was one of two exclusive marketing provisions at issue in this case:

If an application (other than an abbreviated new drug application) submitted under subsection (b) for a drug, no active ingredient (including any ester or salt of the active ingredient) of which has been approved in any other application under subsection (b), was approved during the period beginning January 1, 1982, and ending on the date of the date of enactment of this subsection [September 24, 1984], the Secretary may not make the approval of an application submitted under this subsection which refers to the drug for which the subsection (b) application was submitted effective before the expiration of ten years from the date of the approval of the application under subsection (b).

21 U.S.C. § 355(j)(4)(D)(i).
*fn3"
Abbott argued that the term "active ingredient" refers to the ingredient in the "final dosage form of the product . . . not the form the ingredient might take upon administration to the patient." Letter from Bryan Yolles, Counsel for Abbott Laboratories, to Ann Witt, Food and Drug Administration (Feb. 27, 1987), reproduced in A.R. at 139A-F. Based upon this interpretation of the statute, the company insisted that the "active ingredient" in Depakote is divalproex sodium and that neither this chemical nor a salt or ester of this chemical had previously been approved under the NDA procedures of section 355(b).
*fn4"
Accordingly, Abbott concluded that Depakote qualifies for ten years of exclusive marketing under section 355(j)(4)(D)(i).

The FDA further reasoned that the congressional policy underlying the ten-year exclusive marketing provision is not served by qualifying Depakote under this provision because Abbott did not perform the extensive clinical studies for safety and efficacy usually required of NDA applicants. Instead, the Agency accepted the company's assertion in the Depakote NDA that the pharmaceutically active component of the drug -- valproic acid -- is identical to that found in Depakene. Thus, Abbott did not make the investment in time or money contemplated by Congress when it determined to include the exclusive marketing provisions in the Hatch-Waxman Amendments. See Agency Decision at 11-14, A.R. at 202-05.

Finally, the FDA rejected Abbott's definition of "active ingredient" as referring to the ingredient in the final dosage form of the drug. Rather, the Agency concluded that as used in sections 355(j)(4)(D)(i)-(v), "active ingredient" refers to the pharmaceutically active component (active moiety) of the drug. The active moiety in both Depakote and Depakene is valproic acid. The FDA relied on its perception of legislative policy underlying the exclusivity provisions to distinguish a broader definition of "active ingredient" applied as the term is used in section 355(j)(2)(A)(ii) which defines the types of drugs that are eligible for the abbreviated approval procedures. Id. at 14-16, A.R. at 205-07.

The Agency concluded that section 355(j)(4)(D)(v), a subsection of the exclusivity provisions not referenced by Abbott, requires that Depakote receive only two years of protection from competition from generic substitutes. That subsection states:

If an application (or supplement to an application) submitted under subsection (b) for a drug, which includes an active ingredient (including any ester or salt of the active ingredient) that has been approved in another application under subsection (b), was approved during the period beginning January 1, 1982, and ending on the date of the enactment of this subsection [September 24, 1984], the Secretary may not make the approval of an application submitted under this subsection which refers to the drug for which the subsection (b) application was submitted . . . before the expiration of two years from the date of enactment of this subsection [September 24, 1984].

21 U.S.C. § 355(j)(4)(D)(v). Because the FDA concluded that the active ingredient in Depakote is valproic acid, which had previously been approved as an active ingredient in Depakene, it determined that Depakote was entitled only to two years of exclusivity.

II. DISCUSSION

On its face, the parties dispute raises a novel issue of statutory interpretation of the exclusivity provisions of the Hatch-Waxman Amendments. An undercurrent of argument focuses on the standards of review applicable under the APA to the FDA's interpretation of these provisions. A threshold issue, however, is presented by Abbott's complaint that the Agency ...

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